Gold Price Forecast: XAU/USD's struggle with 100-DMA extends into a big week

  • Gold bulls looking for an upside extension as US dollar wobbles on a softer inflation outlook.
  • DXY needs to give out at daily support to help gold bulls towards the daily 38.2% Fibo target. 
  • XAU/USD fails to clear key resistance at $1,790

Update: Gold price is posting small gains starting out a big week this Monday, consolidating the previous week’s three-day uptrend, as the US dollar attempts a recovery across the board. Markets have turned cautious amid Delta covid strain concerns and an unexpected slowdown in the Chinese services sector, lifting the dollar’s safe-haven demand. However, with the attention turning towards the FOMC minutes and ECB’s special meeting, gold is struggling to extend last week’s advance above the critical 100-Daily Moving Average (DMA), currently at $1790.

On Friday, gold price jumped and briefly recaptured the 100-DMA on a big beat on the US NFP data, which downed the dollar amid ‘sell the fact’. The precious metal failed to close the day above that level, as the upbeat numbers boosted the Fed’s tapering expectations.

Read: Will Fed hawks peck Gold?


For the start of the week, the price of gold is looking bid and it ended on Friday higher for the third day in a row.

The US dollar was a factor this time around that had otherwise been supported into the Nonfarm Payrolls.

During the mid-week business, the greenback was rising at the same time as gold but this time around gold was propelled forward by a weaker US dollar which snapped 4-days of higher highs.

XAU/USD was ending at $1,787.45  by the close and had travelled between the lows of $1,774.35 and the highs of $1,795.10 following a mixed US Nonfarm Payrolls report for June.

Despite the strong headline number, the dollar failed to move higher even though 850,000 jobs last month had been created after rising 583,000 in May.

There was a focus, however, on the Unemployment Rate which rose to 5.9% from 5.8% in May, while the closely watched average hourly earnings, a gauge of wage inflation, rose 0.3% last month.

The wage component was lower than the consensus forecast for a 0.4% increase and, therefore, traders do not see there being any rush from the Fed to react to inflation at this time.

Profit-taking has ensued ahead of the July 4th holidays but as traders return, price action in the greenback could get interesting. 

Despite a soft dollar on Friday, it posted the week on a positive note, with an 0.5% gain as markets look ahead to the Federal Open Market Committee meetings on July 27-28 and September 21-22, along with the Jackson Hole Symposium August 26-28.

Moreover, gold will likely come under pressure if there is an environment of continuous strong US data over the coming weeks that should lend support to the greenback.

However, for the immediate future, the greenback would be expected to ease off in the wake of Friday’s US jobs report, which markets took a “goldilocks” view of, falling into the hands of the higher beta currencies. 

CFTC positioning

Meanwhile, gold investors continued to reduce net length following the Fed's June hawkish tilt last week which leaves prospects for a short-covering to propel prices higher. 

''At the end of the week, gold jumped to $1,788/oz as the market judged the June payrolls data to be conducive to easy monetary policy for a prolonged time, and as yields plunged'' analysts at TD Securities explained. 

''Given that there may be additional angst surrounding the Delta variant in the coming weeks and less worry about tight labour markets supporting inflation, gold may well move above the 100 DMA resistance to a new higher level, which should see net long exposure increase.''

Technical analysis, DXY & gold

From a technical standpoint for the DXY, should current support give way, then the price will be en route to the neckline of the W-formation:

Meanwhile, the price of gold broke and closed above 1,782 1 July highs after retesting the 10 EMA on the 4-hour time frame which acted as support.

The following is an analysis that shows the progress by the bulls seeking a weekly upside extension within a reverse head and shoulders:

Live market progress

meanwhile, the price is seeking an extension above the highs at this juncture which opens the case for 1,808 as being the 38.2% Fibo of the last daily bearish impulse which has a confluence with the 13th May lows. 

Previous update

Update: Gold (XAU/USD) snaps a three-day uptrend amid a sluggish Asian session on Monday. That said, the yellow metal drops to $1,785, down 0.15% intraday, by the press time. In doing so, the gold prices follow S&P 500 Futures as market players reassess Friday’s risk-on mood amid a light calendar and the coronavirus (COVID-19) woes.

Mixed readings of the US jobs report for June raised doubts on the chatters over the Fed’s monetary policy adjustments, which in turn backed the market’s optimism and gold prices on Friday. However, covid concerns in Asia-Pacific and a recheck of the sustained easy money policies, amid a quiet day, seem to weigh on the sentiment of late. Against this backdrop, S&P 500 Futures print 0.13% intraday losses after refreshing the record top the previous day.

Given the off in the US and an absence of major catalysts, gold prices may extend the pullback moves.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD: An inverse head-and-shoulder targets 1.1750 before resuming the down trend

EUR/USD extends its five-day rally, trades above 1.1600. The market sentiment remains upbeat, as major US stock indices record gains between 0.46% and 68%, while the safe-haven status of the US dollar weakens across the board.


GBP/USD bulls flirt with 1.3800 around monthly high, focus on UK inflation

GBP/USD seesaws around 1.3800 as traders brace for the key inflation data during Wednesday’s Asian session. The cable pair cheered hopes of the Bank of England’s (BOE) rate hike, as well as broad US dollar weakness, to refresh the multi-day high the previous day. 


Gold at a critical technical juncture

Gold is subdued and rests in familiar territory awaiting the next major catalyst to kick start it into gear within bullish territory towards the psychological $1,800 level. The stagflation themes feed through into the precious metals hedge. 

Gold News

XRP price will dip before it breaks out

A brief technical and on-chain analysis on XRP price. Here, FXStreet's analysts evaluate how Ripple bulls take control.

Read more

UK September CPI Inflation Preview: Will rising price pressures boost British pound?

Annual CPI in UK is expected to stay unchanged at 3.2% in September. BoE rate hike prospects have been lifting the British pound. GBP/USD could continue to push higher with a daily close above 1.3850.

Read more